The pre-Budget Economic Survey today said the country's tax system continues to be complex and asked the Government to undertake further reforms, including implementation of a uniform tax structure goods and services tax.

"In spite of the improvements made in the tax design and administration over the past few years, the systems at both Central and state levels still remain complex," the Economic Survey for 2008-09 tabled in Parliament today stated.

Major changes in the system over the past several years include implementation of value added tax (VAT), planned phase out of central sales tax, introduction of service tax, and rationalisation of CENVAT (central VAT).

"The most significant cause of complexity is policy related and is due to the existence of exemptions and multiple rates, and the extant structure of the levies," it said, adding these deficiencies are the most glaring in the case of CENVAT and the service tax.

The starting base for CENVAT is narrow and is being further eroded by a variety of area-specific, and conditional and unconditional exemptions, the survey said.

However, it said the introduction of goods and services tax (GST) would thus be opportune for deepening the reform process already underway. GST is scheduled to be implemented from April 1, 2010.

Citing the recommendation of the Empowered Committee of state finance ministers for a "dual" GST (to be levied by both Centre and states), the survey said it strikes a good balance between fiscal autonomy of the Centre and states, and the need for harmonisation.

"It empowers both levels of government to apply the tax to a comprehensive base of goods and services, at all points in the supply chain. It also eliminates tax cascading, which occurs because of truncated or partial application of the Centre and state taxes," the survey said.